An examination of the synthesis and processing of HIV-1 envelope precursor glycoprotein gpl6O revealed that only 5 to 15% is cleaved to produce the mature gpl2O in infected human PBLs or in continuous T cell lines. Intracellular sorting results in the transfer of most uncleaved gpl6O to lysosomes, where it is degraded, while gpl2O is transported to the cell surface and subsequently, secreted. These results indicate that intracellular cleavage of gpl6O determines the intracellular transport and survival of the envelope glycoproteins necessary to produce infectious virus. An amino acid substitution within the second conserved domain (residue 267) of gpl2O results in the production of noninfectious virus. Molecular characterization of "second site" spontaneous revertant viruses which arose during long-term co-cultures of the env mutant defined three discrete regions of gpl2O (around residues 128, 267, and 308) which interact with one another during the early phases of productive viral infection. The critical step affected by these domains of the viral envelope occurs subsequent to the adsorption of virions to the cell surface and either prior to or concomintant with the fusion of viral and cellular membranes. Although infected cells synthesize comparable amounts of gpl6O/120 and vpu, no vpu was detected in cell-free culture fluids implying that it is not virion associated. The release of progeny virions from cultures producing vpu-defective virus was found to be delayed, resulting in the intracellular accumulation of viral proteins. These results suggest, therefore, that vpu mediates the release of progeny virus particles from infected cells.